COMMISSIONER OF INCOME TAX Vs. K G RAMAKRISHNIER

JUDGEMENT

(1.) THE question that stands referred to us, "Whether, on the facts and in the circumstances of the case, the share of profits from K. G. Ramkrishnier and Co. is assessable in the hands of the Hindu undivided family or in the hands of the individual members of the Hindu undivided family "" arises on the following facts :

(2.) The Hindu undivided family consisting of the father, K. G. Ramakrishnier and his two adult sons, Perumal Iyer and Venkatakrishna Iyer, was a partner in the firm of K. G. Ramakrishnier and Co., the father representing the family in that firm. In that firm, the other partner was K. G. Sitarama Iyer, who represented an other Hindu undivided family. In this reference, we are concerned with the first-mentioned family. The Hindu undivided family of K. G Ramakrishnier had income from property besides the half share of the income from the firm. Up to and including the assessment year 1957-58, assessments were made on the Hindu undivided family. On 5th February, 1958, the Income-tax Officer issued a notice calling upon this family to pay advance tax in respect of the assessment year 1958-59 on the basis of the last completed assessment for 1957-58.

(3.) INCOME-tax Officer thought that this new firm of the members of the family did not carry on any business of its own and was only concerned in sharing the profits which the Hindu undivided family had been receiving from the firm of K. G. Ramakrishnier and Co. The INCOME-tax Officer accordingly held that the family itself continued to be the partner in that firm and that the share income had to be assessed in its hands only.An appeal was taken to the Appellate Assistant Commissioner. It was contended before him that the INCOME-tax Officer had overlooked the entries relating to transfer of the capital as among the three members of the family and that on the closing date of the previous accounting year, the capital had been divided into three shares and necessary entries had been made in the books of the family.